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Directors' Knowhow is a monthly article which highlights changes and updates of relevance to small and mid-size quoted companies.

Coronavirus-related updates


Throughout May, the Coronavirus (COVID-19) pandemic has again dominated regulatory and market developments. The first section of this month’s Directors’ Knowhow includes the relevant policy and market developments and updates relevant to the Coronavirus pandemic.

ICAEW and ICAS guidance for SMEs


On 19 May 2020, the ICAEW and ICAS jointly published guidance for the owners and directors of SMEs to help them assess the prospects of their business in light of the coronavirus. The guidance is targeted at small and medium-sized businesses who have been affected by Covid-19 as they prepare their accounts.


The guidance includes, amongst other things, information on:

  • How a company can reflect the impact of Covid-19 in cash flow forecasts;
  • The specific factors directors should be looking to address;
  • Differing assumptions; and
  • Working with accountants and auditors.

If you wish to view the guidance, you may do so here.

Updated FRC guidance for companies on corporate governance and reporting


On 12 May 2020, the FRC published an updated version of its guidance for companies on corporate governance and reporting during the coronavirus pandemic. The new section includes guidance relating to interim financial results, and in particular, regarding going concern assumptions and liquidity risk disclosures, as well as the need to consider whether a company should engage their auditors to perform an interim review.


The new section includes guidance on:

  • The need for directors to exercise judgment about the procedures that they apply to assess the going concern assumption;
  • The certain issues which may require a re-examining of the going concern assumption and going concern liquidity risk disclosures;
  • The need for directors to undertake procedures similar to those that they would have carried out for annual financial statements to ensure that all relevant issues have been identified and considered if going concern has become a significant issue; and
  • Whether companies should consider engaging auditors to perform an interim review.

To view the guidance, please click here.

IA outlines shareholder expectations on executive pay during the crisis


At the end of April, the Investment Association published guidance outlining shareholder expectations in relation to executive pay in light of the outbreak of Covid-19. The Investment Association has produced this guidance in response to Remuneration Committees who have asked how they should be reflecting the impact of Covid-19 on executive pay.


There is recognition amongst shareholders that Remunerations Committees will need to carefully find a balance between incentivising executive performance and ensuring that executive experience is commensurate to all other stakeholders. That is, whilst executives need to be incentivised during these difficult periods and show significant leadership and resilience, their pay should be commensurate to what shareholders and employees are experiencing.


If you wish to view the guidance, you may do so here.

Corporate Insolvency and Governance Bill 2019-20


On 20 May 2020, the Government published its Corporate Insolvency and Governance Bill 2019-21. The Bill introduces, amongst other things, a number of measures aimed at providing companies with temporary easements relating to company filing obligations and AGMs and other meetings. The legislation was introduced in order to prevent companies from encountering difficulties during the current crisis being forced to file for bankruptcy.


The Bill includes:

  • Greater flexibility for general meetings taking place between 26 March and 30 September 2020;
  • Giving companies the ability to postpone holding AGMs if they fall between 26 March and 30 September 2020;
  • Permitting a temporary extension to the period in which a public company is required to file its annual accounts with Companies House;
  • Granting the Secretary of State powers to make regulations to extend the deadlines for certain company filings; and
  • Introducing measures to temporarily suspend parts of insolvency law to support directors through the crisis without the threat of personal liability.

QCA publications and policy updates

This section of the Directors’ Knowhow features all of the publications produced by the QCA and any relevant updates that have occurred over the last month.

QCA Non-Executive Directors Survey 2020


The QCA recently conducted a survey with small and mid-size quoted companies and their advisor firms in order to find out more about Non-Executive Directors (NEDs). The report covers eight sections, including:

  • Salaries;
  • Working hours;
  • Knowledge, skills and experience;
  • Independence;
  • Positions;
  • Value for money;
  • Board evaluations; and
  • Recruitment.

If you wish to read the report, please click here.

QCA Small and Mid-Cap Sentiment Index


 The results of the QCA Small and Mid-Cap Sentiment Index were published at the beginning of May, where over 130 quoted companies and 45 advisory firms took part in the survey. The results provide an insight into how small and mid-size quoted companies are managing during the current crisis, as well as what their plans for the future are.


To view the result of the survey, please click here.

Reports, guides and regulation

This section features some of the key legislative/regulatory developments and changes, as well as any new reports or guidance issued by industry bodies or regulators, over the last month.

FCA Primary Market Bulletin 28


On 27 May, the FCA issued the 28th edition of the Primary Markets Bulletin. Within the bulletin, the FCA publish a statement on temporary relief for companies on the timing of the publication of half yearly financial reports. This is a temporary relief aimed at supporting companies facing the challenges of corporate reporting during the coronavirus pandemic. The relief will give companies an additional month to publish their half yearly financial reports.


Also included within the bulletin is a statement on market practice on going concern assessments, which is in response to difficulties raised by issuers about how to address coronavirus-related uncertainties in their going concern assessment and their disclosure in financial statements. The statement urges issuers and auditors to continue to be as clear and transparent as possible about the impact of the pandemic in their financial statements. However, the FCA are also encouraging investors and other users of financial statements to take into account the unique set of circumstances facing companies at the moment. In light of this, they encourage investors to bear the pandemic in mind when there may be some uncertainty surrounding a company’s financial position.


Finally, the bulletin provides commentary on the FCA’s view of issuers’ engagement with shareholders during the ongoing crisis. In particular, the FCA encourages companies to be as open as possible about the implications of the coronavirus on their business. Companies should persevere with this through formal disclosures to the market through both financial reports and trading updates, as well as considering if there are other ways to engage with, and provide participation opportunities for, shareholders.


If you wish to read the bulletin, you may do so here.

Update on FRC transformation programme


At the beginning of May, the FRC published an update on its transformation programme as the regulator progresses on its transition into the Audit, Reporting and Governance Authority (ARGA). The transformation will occur by taking forward the recommendations of Sir John Kingman’s Independent Review of the FRC, the CMA review and Sir Donald Brydon’s review into the quality and effectiveness of audit.


There are six key areas that the transformation programme comprises of, notably: 1) setting up the new regulator; 2) audit scope and regulation; 3) corporate regulation; 4) corporate reporting; 5) corporate governance; and 6) market reform. While many changes require primary legislation, the FRC is currently working alongside BEIS in order to find ways to take forward some of the recommendations more immediately. This includes:

  • Formalising a plan for the streamlining of the governance of the FRC;
  • Adopting The Regulators’ Code;
  • Enhancing the complaints handling process, as well as publishing a budget and strategy for the 2020 financial year;
  • The FRC’s Audit Firm Monitoring and Supervision team is developing principles for the operational separation of the Big 4;
  • Reviewing the format of the FRC’s Audit Quality Review; and
  • Improved transparency through the FRC’s Annual Enforcement Review.

In terms of next steps, the FRC will continue to work with BEIS to take the recommendations forward, and, where possible, implement the recommendations that do not require consultation or legislation, as well as setting out plans for changes that require consultation.


To view the update, please click here.

FCA Market Watch 63


In May, the FCA released the 63rd edition of their Market Watch newsletter. The newsletter sets out the FCA’s expectations of market conduct in the context of the coronavirus regarding increased capital raising and alternative working arrangements. The FCA stress the importance of maintaining and ensuring that the right controls around market abuse, conduct and conflicts of interests are in place. In doing so, the FCA encourages a particular focus on:

  • ensuring inside information continues to be appropriately identified and handled by all persons involved in the information chain so that it is not misused for insider dealing or for commercial advantage;
  • ensuring inside information is appropriately disclosed by issuers so that investors are not misled;
  • maintaining robust market surveillance and suspicious transaction and order reporting (STORs) by relevant market participants, in the context of changes in market conditions and the current use of alternative working arrangements;
  • maintaining robust market surveillance and suspicious transaction and order reporting (STORs) by relevant market participants, in the context of changes in market conditions and the current use of alternative working arrangements; and
  • identifying and managing conflicts of interest by market participants that may arise around capital raising events.

To view the Market Watch, please click here.

FRC Lab newsletter


At the end of April, the FRC’s Financial Reporting Lab published their first newsletter for 2020. Included within the newsletter is the Labs recently published Covid-19 infographic and a survey for investors to complete on the information they want to see companies prioritising in light of the current circumstances.


The infographic includes key questions that companies should be asking themselves, such as how much cash does the company have; what cash and liquidity could the company obtain in the short-term; what can the company do to manage expenditure in the short-term; what other actions can the company take to ensure its visibility; and how is the company protecting its key assets and value drivers, as well as including helpful disclosure recommendations.


To view the infographic, please click here.


The newsletter also provides an update on the Lab’s planned and newly-released projects and reports.


To view the newsletter, please click here.

Financial Services Regulatory Initiatives Forum launches grid


On 7 May, the Financial Services Regulatory Initiatives Forum launched their grid in order to help financial firms prepare for upcoming regulatory work. The Regulatory Initiatives Grid – which was announced by the Chancellor in March’s Budget – has been brought forward in order to help firms during the current crisis.


The Forum consists of the Bank of England, the FCA, the PRA, the Payments Systems Regulator and the CMA, with HM Treasury as an observer member. The grid lays out the planned timetable for major initiatives, including the financial services legislation to prepare for the end of the EU withdrawal transition period. In addition to this, the grid also highlights the initiatives that have been cancelled or delayed in order to ease the burden on financial services firms during the current pandemic.

FRC amendment to Strategic Report


On 11 May, the FRC issued an update to its 2018 Guidance on the Strategic Report. The update is a change to Appendix II and Appendix III of the guidance and includes a clarification that a public company must include a section 172 statement in its Strategic Report, even if it meets the medium sized company size criteria.


To view the update, please do so here.

Articles, news and speeches


This section features relevant news, articles and publications for small and mid-size quoted companies that has been published in the last month.

FRC podcast on audit guidance during COVID-19


As part of their response to the coronavirus, the FRC have produced a podcast on audit guidance during the ongoing crisis. Mark Babington, the FRC’s Active Executive Director of Regulatory Standards discusses the new guidance issued by the FRC to assist auditors during the coronavirus pandemic.


To listen to the podcast, please click here.


This section provides an update of any recently submitted QCA consultation responses, as well as the consultation responses the QCA is currently drafting.

QCA policy consultation responses


The QCA’s Secondary Markets Expert Group contributed to the response to the European Commission consultation on the review of the MiFID II/MiFIR regulatory framework.


To view the response, please click here.


The QCA is seeking views on the below consultations:

If you have any comments you wish to contribute on either of these consultations, please get in touch with Jack Marshall, Policy Adviser,


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